Businessweek Archives

At&T Really Wants To Disconnect This Deal

March 05, 1995

International Business: EUROPE

AT&T REALLY WANTS TO DISCONNECT THIS DEAL

On Feb. 25, telecommunications ministers from the top seven industrialized countries, along with the chief executives of most of the world's biggest phone companies, not to mention Vice-President Al Gore, will gather in Brussels for three days. Publicly, they will kick around the idea of a global Information Superhighway and how to build it. But behind the diplomatic niceties is a smoldering trade dispute: a proposal by Germany's Deutsche Telekom and France Telecom to buy a 20% stake in Sprint for $4.2 billion.

This deal drives AT&T wild. The U.S. giant is furious that the German and French state-owned monopoly phone companies may soon own a 20% stake in the third-largest U.S. long-distance operator while foreign investors are virtually locked out of the two biggest markets in Europe. Says AT&T Chairman Robert E. Allen: "Countries like France and Germany may talk about competition, but their markets are still closed to us."

A determined Allen will be heading for Brussels to press the Germans and French to open their markets ahead of a 1998 deadline set by the European Union. But AT&T is doing more than complaining. It wants the Federal Communications Commission to make equal market access mandatory for foreign carriers seeking to get into the U.S. market. And it wants the Sprint deal put on ice until the French and Germans meet this standard. While Germany has agreed in principle that its market needs to be opened sooner, the French market remains resolutely closed.

Meanwhile, the Germans are organizing a European Union counter-attack. They want the U.S. to end its current limit of up to 25% on foreign ownership of media and telephone companies. Says German Post & Telecommunications Minister Wolfgang Butsch: "There should be effective market access for everyone without any restrictions on foreign capital." Looks like the global I-way could turn into a global boxing ring.By Catherine Arnst in New York, with Linda Bernier in Brussels